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Health Savings Account FAQs

 
 

What types of Health Savings Accounts (HSAs) are available at The Island?

We offer HSA Checking, HSA Savings, and HSA Certificates.

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How much money do I need to establish a Health Savings Account?

Just $50 from you, or your employer, opens an HSA Checking or Savings. HSA Certificates requires a minimum deposit of $2,500; a variety of terms is available.

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How do I make contributions?

It's as easy and convenient as making deposits to your other Island accounts:

  • Use payroll deduction
  • Visit any Island branch
  • Use myisland.com online banking or NiftiPhone® automated phone banking to transfer funds from your other Island accounts
  • Contact us to set up recurring automatic transfers from another Island account
  • Send in a check by mail

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How can I access the funds in my HSA?

To pay for qualified medical expenses, simply use your HSA Visa® debit card, The Island's online bill payment service, or write a check from your HSA Checking account. Your payments are tax-free when used to pay for a qualified medical expense, and it is your responsibility to determine if an expense is qualified (consult a competent tax professional). You can keep track of your balances online at myisland.com, through NiftiPhone, or by calling the Contact Center.

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If I don't have enough for a payment, can the credit union cover me as a courtesy (assuming I am a member in good standing)?

No. The IRS strictly prohibits this practice with HSAs.

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Can I use an ATM to make HSA deposits and/or withdrawals?

No. For proper tax reporting, ATM transactions are not permitted for HSAs.

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Are there any fees associated with my Island HSA?

There may be a fee of $1 per month if the average daily balance of all assets in your Health Savings Accounts is less than $2,500. This fee is waived for the first year. Please see The Island's Rates, Fees, and Charges online at myisland.com for more information.

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My employer will be making contributions electronically, on my behalf, to my Health Savings Account. What do I need to do?

  • Give your employer our Routing Number (322281468) and your HSA account number.
  • Remember that contributions made by you, or your employer, are subject to IRS limits. Be sure to track your total contributions so you do not exceed the limits defined by law. Ask your employer, or a qualified tax advisor, for further details.

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What if I pay an expense from my HSA and later discover it is not a qualified medical expense?

Notify us immediately:

  • To avoid penalties, you will need to deposit the funds back into your Health Savings Account no later than February 28 of the year following the payment.
  • If you miss the above deadline, you must claim the amount as "income" on your tax return, and are subject to an IRS tax penalty if you are under age 65.

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How is IRS reporting handled?

  • The Island will mail you IRS Form1099SA by January 31, following the end of the previous tax year. This form shows the total distributions (payments) made from your HSAs during the tax year.
  • All contributions into the HSA are reported, to the IRS, as "current year" contributions, unless you instruct us differently. ("Prior year" contributions can be made by visiting a branch, calling the Contact Center, or by mail. Mail requests must clearly identify the tax year of the deposit.)
  • You have until April 15 to make all your HSA contributions for the prior tax year. The Island will mail you IRS Form 5498SA, reflecting total prior tax-year contributions, by May 31.

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